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MoneyWi$e ‘Banking Basics’

MoneyWi$e ‘Banking Basics’ MoneyWi$e is a joint financial education project of Consumer Action and Capital One What will the ‘Banking Basics’ training each us? We want you to gain a thorough understanding of personal banking services and how they can benefit you. You will learn about:

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MoneyWi$e ‘Banking Basics’

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  1. MoneyWi$e ‘Banking Basics’ • MoneyWi$e is a joint financial education project of Consumer Action and Capital One MoneyWi$e: Banking Basics

  2. What will the ‘Banking Basics’ training each us? • We want you to gain a thorough understanding of personal banking services and how they can benefit you. MoneyWi$e: Banking Basics

  3. You will learn about: • The difference between banks and credit unions. • How to select a bank. • How to open a bank account. • How to keep bank costs down. • How to get more interest on your savings. MoneyWi$e: Banking Basics

  4. Participants’ folders contain: • You Can Bank On It (brochure) • Check Writing (class activity) • Sample ChexSystems Report • Sample Account Application • Choosing a Bank or Credit Union (take-home worksheet) • Evaluation of the MoneyWi$e Banking Basics Seminar MoneyWi$e: Banking Basics

  5. Bank accounts • What are some of the advantages to having a bank account? MoneyWi$e: Banking Basics

  6. Advantages of a bank account include: • Your money is safe. • Each account is insured. • Canceled checks are proof that you paid a bill. • Using check-cashing stores and money orders is more expensive than paying bank fees. • A bank account can help you keep track of how you spend your money MoneyWi$e: Banking Basics

  7. Banks and credit unions • What is the difference between a bank and a credit union? MoneyWi$e: Banking Basics

  8. Banks vs. credit unions • A credit union is a non-profit cooperative financial institution owned and controlled by its members. • A bank is a for-profit company that makes money from charging fees and lending money. MoneyWi$e: Banking Basics

  9. Credit unions... • Serve groups that share something in common, such as their profession, place of worship or neighborhood. • Provide checking and savings accounts and loans, often with better rates than banks. MoneyWi$e: Banking Basics

  10. Account verification services • How do banks find out about your past account history? MoneyWi$e: Banking Basics

  11. ChexSystems... • Is the major national account verification company. • When you apply for a new checking account, the bank finds out if you are in the ChexSystems database. • If you ever abandoned a checking account with a negative balance, you are probably listed in the ChexSystems database. MoneyWi$e: Banking Basics

  12. ChexSystems records • Reports about overdrafts or closed accounts remain in your file for five years • You can get a copy of your report ($9 in most states) by contacting ChexSystems • You have the right to dispute inaccurate information in your account verification report. MoneyWi$e: Banking Basics

  13. Your rights • You can get a free copy of your ChexSystems report if: • You have been denied a bank account in the past 60 days because of information provided by ChexSystems. • Your checks were stolen and used by an impostor or you are the victim of any bank fraud. MoneyWi$e: Banking Basics

  14. Don’t get discouraged • If you try to open a new checking account and are turned down by a bank or credit union because of your past account history, don’t give up. • Different banks and credit unions have different requirements, so shop around. MoneyWi$e: Banking Basics

  15. ChexSystems sample report • Let’s review the categories of the ChexSystems sample report: • Reported information • Drivers license validation • Drivers license verification • Consumer initiated inquiries • Customer initiated inquiries • Retail information • Check printing order history MoneyWi$e: Banking Basics

  16. Checking accounts • What kinds of things can you do with a checking account? MoneyWi$e: Banking Basics

  17. Checking accounts • Checking accounts allow you to: • Write checks. • Use your ATM/debit card to get cash at ATM machines and to make purchases at point-of-sale terminals (such as at the supermarket). • In some cases, your ATM/debit card can be used to make purchases where credit cards are accepted. MoneyWi$e: Banking Basics

  18. Checking accounts • Free checking • Direct deposit • Electronic transfer accounts (ETAs) • Basic (Lifeline) accounts • Online banking and bill payment • Low cost accounts for seniors or students MoneyWi$e: Banking Basics

  19. Debit cards • You can use your debit card in two ways: • At an ATM or a point-of-sale (POS) terminal with your personal identification number, or PIN. • At stores and restaurants that accept credit cards, without providing your PIN. You will be asked to sign a receipt. MoneyWi$e: Banking Basics

  20. Debit cards • If your debit card is lost or stolen: • Alert your bank as soon as possible. The longer you wait, the more money you might be responsible for if an unauthorized person uses your card to buy things. MoneyWi$e: Banking Basics

  21. Check writing activity • In this activity you will practice writing a check and entering it into a sample checkbook register. MoneyWi$e: Banking Basics

  22. Check writing • Why is it important to enter the checks you write in your checkbook register? MoneyWi$e: Banking Basics

  23. Keep a record of your checks: • So that you don’t bounce checks. • So that you know how much money you have in the bank. • So that you can track your spending and stick to a budget. MoneyWi$e: Banking Basics

  24. Savings accounts • How is a savings account different from a checking account? MoneyWi$e: Banking Basics

  25. What is interest? • Interest is the cost of lending money. • When a bank gives you a loan, you pay interest to them. When you keep your savings in a bank, they pay interest to you. • In a savings account, your money works for you by earning interest. MoneyWi$e: Banking Basics

  26. Types of interest • There are two types of interest: • Simple interest means that you only earn interest on your initial deposit. • Compound interest allows you to earn interest not only on your initial deposit, but also on the interest you earn as you go along. MoneyWi$e: Banking Basics

  27. How to figure interest • The annual percentage rate (APR) is the amount of money you would earn if you left your money on deposit for one year. • For example, if you left $100 on deposit for one year at a 2% APR, you would earn $2 in interest at the end of the year. MoneyWi$e: Banking Basics

  28. Session One Wrap-up • Next time we will discuss: • ways to earn more interest. • safe deposit boxes. • what to consider when you are looking for a bank or credit union. • how to complain if you have a problem with your bank. • See you then! MoneyWi$e: Banking Basics

  29. Banking Basics • Session Two (2 hours) MoneyWi$e: Banking Basics

  30. Banking Basics • Session Two • Today we’ll learn how you can earn more interest on your money with CDs, what to keep in a safe deposit box, things to consider when you are looking for a bank or credit union and how to complain if you have a problem with your bank. MoneyWi$e: Banking Basics

  31. Certificates of deposit (CDs) • What is a certificate of deposit? MoneyWi$e: Banking Basics

  32. Certificates of deposit (CDs) • A certificate of deposit, or CD, is a kind of savings account in which you leave your money on deposit for a set period of time in order to earn interest. • The longer the term of your CD, the higher your interest rate will be. • If you withdraw your money before the term ends, you will lose interest and might have to pay a penalty. MoneyWi$e: Banking Basics

  33. Safe deposit boxes • What is a safe deposit box? • What are some things that you might keep in a safe deposit box? MoneyWi$e: Banking Basics

  34. Safe deposit boxes • Copies of insurance policies. • Birth, marriage and death certificates. • Mortgages, leases and other important contracts. • Stock and bond certificates and certificates of deposit (CDs). • Valuable jewelry. MoneyWi$e: Banking Basics

  35. Safe deposit boxes • What should you not keep in a safe deposit box? MoneyWi$e: Banking Basics

  36. Safe deposit boxes • The originals of your will and life insurance policies should not be kept in a safe deposit box. • The box might be sealed at the time of your death and your survivors will need a court’s permission to open it. MoneyWi$e: Banking Basics

  37. Opening a bank account • What are some questions you should ask when you are deciding on a bank or credit union? MoneyWi$e: Banking Basics

  38. Questions to ask: • What is the minimum to open an account? • What is the interest rate on the account? • Is there a monthly fee? • Is there any way to avoid monthly fees? • What happens if my balance falls below the minimum requirement? MoneyWi$e: Banking Basics

  39. Questions to ask: • Is there a maximum number of checks I can write each month? • Is there a fee for using your ATMs? • TIP: Use the MoneyWi$e worksheet in your folders as a guide when you apply for an account at a bank or credit union. MoneyWi$e: Banking Basics

  40. Opening a bank account • What should you bring with you to the bank when you are opening a new account? MoneyWi$e: Banking Basics

  41. Identification • When you go to the bank branch to open a new account, bring: • Photo identification, such as a driver’s license, state ID card or passport • Proof of your address, such as a utility bill or lease • Your Social Security number for tax purposes MoneyWi$e: Banking Basics

  42. Keeping your account straight • Once you have an account, write down and deduct in your checkbook: • Every check you write • Every ATM or debit card transaction you make • Any bank fees you pay MoneyWi$e: Banking Basics

  43. Banking costs • What are some ways you can save money on banking costs? MoneyWi$e: Banking Basics

  44. Ideas to keep banking costs down • Combine checking and saving balances to avoid monthly fees. • Save on ATM fees by using your own bank’s machines. • If you can’t avoid an ATM fee, take out larger sums less frequently. MoneyWi$e: Banking Basics

  45. Ideas to keep banking costs down • Use direct deposit for your paycheck or government benefits check. • Buy checks from a mail-order company instead of your bank. • Ask the bank to reverse the occasional late fee or bounced check fee. MoneyWi$e: Banking Basics

  46. Saving on checks • These are two mail-order sources for buying checks for less: • Checks in the Mail, 877-397-1541, (www.citm.com) • Current Checks, 800-426-0822, www.currentchecks.com MoneyWi$e: Banking Basics

  47. Overdraft protection • An optional bank service called overdraft protection can save you from bouncing checks. • It can work with a loan or line of credit or with your savings account. MoneyWi$e: Banking Basics

  48. Sample savings account application — an activity • This is a sample application for an interest-bearing account at “MoneyWi$e Bank.” • Let’s walk through the activity together. MoneyWi$e: Banking Basics

  49. Savings account application • Ownership • W-9 Certification MoneyWi$e: Banking Basics

  50. Savings account application • Optional Services • ATM Cards • Linking accounts • ATM fees MoneyWi$e: Banking Basics

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